It cost the United States Mint more than face value to produce and distribute the penny. For the fiscal year ending, September 30, 2010, the unit cost for the cent was 1.79 cents, resulting in the production of the penny at a loss of $27.4 million. Now $27.4 million isn't a significant amount in the big picture, but it is $27.4 million that is being wasted for no good reason.
Eliminate the physical penny, but not the denomination. Instead round all retail sales transactions up to the nearest nickel and take those "virtual" pennies and apply them to the national debt.